3 Perspectives on How to Benefit from Product-Led Growth

John Cutler

Former Product Evangelist at Amplitude

people reacted
6 -minute Read,

Posted on January 18, 2023

There’s more than one way to benefit from product-led growth.

3 PLG Perspectives

Let’s say you saw a documentary about extreme skiing. Now you’re determined to give it a try. You know it’ll help you burn calories, improve your flexibility, and increase your strength. Plus, going off-piste just looks insanely fun.

But you can’t head off to Mont Blanc and start immediately. Before you’re ready to go extreme skiing, you’ll need to improve your skiing on regular runs, learn to do mountaineering, and practice hiking uphill with your skis on. And working on each of these things before reaching your ultimate goal will benefit you. They’ll give you some of the enjoyment, fitness, and adventure that you’re craving.

It’s the same with product-led growth (PLG).

PLG isn’t something you can impose on an organization and expect it to bring you results overnight. The changes you need to make—and the skills and knowledge you need to unlock in your organization—take time.

On your PLG journey, you need to avoid gap thinking (where you focus on a far-off future end state) in favor of a present-thinking mindset. In present thinking, you focus on progressing from your current condition to your ideal current condition. Instead of waiting for a big magical change, you keep changing and iterating as you head toward your ultimate goal.

You don’t need to fully transition to the perfect version of PLG to benefit from it. In my work at Amplitude, I’ve observed different versions of PLG and the positive effects they’ve brought. Take these versions as evidence that we can broaden our definition of PLG and use them as inspiration for the different ways you can introduce PLG into your organization.

Key takeaways

  • There’s more than one way to implement PLG while still benefiting from it.
  • You can implement PLG as a tool chest, as a motion and business model, and as a mindset and culture.
  • Using PLG as a tool chest means applying the skills and principles of PLG to different product types and areas of your business.
  • In PLG as a motion, your product becomes the main driver of growth instead of a business model with a sales or marketing-led motion.
  • PLG as a mindset and culture changes how you approach all parts of your business—but you can’t just “install” culture; you need to convince people of its benefits.

1. PLG as a tool chest

PLG isn’t only useful as a growth model for self-service software products. Teams can apply the principles and skills linked to PLG in different areas of your business and different types of products.

Product-led growth requires a wide range of skills, including modeling, experimentation, customer psychology, design, pricing and pricing psychology, content strategy, SEO, market segmentation, data management, customer experience (CX), marketing operations, and more. This unique mix of skills and tools sets PLG apart from normal product management, although there’s a significant overlap. When viewed as a tool chest, we can apply PLG in many environments and contexts—not just companies with PLG motions.

One key part of PLG is that potential customers experience the value of your product in a self-service way with minimal friction. In software products, that looks like freemium plans or reverse trials. People try out your product for a limited amount of time/with limited features and see the value it brings, which encourages them to pay for it—no input from your sales team is necessary.

You’d think a frictionless trial experience would be impossible with a physical product. However, many furniture brands have started to use augmented reality to allow customers to try before they buy.

Consumers can use an app to scan areas of their homes and check out how different pieces of furniture would look in the space. Instead of having to be convinced of the value of, say, a fancy new sofa, by marketing and sales, customers can see the benefit it would bring to their home. That trial experience gives them the confidence to pay for the product.

Another crucial aspect of PLG is engagement loops; they drive retention, monetization, and acquisition. Although we usually think about engagement loops as only happening in software products, some direct-to-consumer brands have created a similar effect by making their shopping experience viral and addictive.

Take Zulily. It sells a range of products (apparel, toys, home accessories, etc.) and has an app where it drops limited-time flash sales. It’s selling physical products: No one signs up for a subscription, and shoppers have a transactional relationship with the company.

Zulily creates an engagement loop because people develop a habit of checking the app to see the latest deals. It also helps the company acquire new customers because the app prompts people to share their bargains with friends. Both of these aspects contain elements of the PLG tool chest and drive growth for the brand.

2. PLG as a motion and model

For many people, implementing PLG means switching your business model from marketing or sales-led motions to product-led motions. When you have a PLG motion, it’s your product that guides customers through their journey.

Customers avoid interaction with salespeople (at least initially). Instead, product trials allow them to experience value in a self-service way, which entices them to buy.

You focus on creating engagement loops so that customers get hooked and keep experiencing value from your product. Those engagement loops drive loyalty, increase customer lifetime value, and encourage people to share the product so you acquire new customers.

The result of a PLG motion is that you fundamentally shift the economics of customer acquisition and retention. When you want to grow, you invest more in your product instead of investing more in sales and marketing.

In this scenario, teams mainly work on two things:

  • Developing an amazing product that showcases value to the customer.
  • Controlling friction in the product.

In PLG, you typically try to reduce friction for everyone. Imagine you’re taking a train. When you arrive at the station, you usually go to one place to check the train times. Next, you go to the desk to get a ticket, then somewhere else to check what platform your train will leave from.

An app that allows people to check all the train information and buy a ticket from their phone brings a smoother experience for the customer. It also removes friction on the company’s side. Everything happens in the same place, so it’s more efficient to run.

However, companies with PLG motions don’t always try to eliminate friction completely. Instead, they adopt the artful use of friction.

For instance, I recently encountered a company that does really well from a PLG motion. When I was buying a product from them, they forced me to jump through a hoop: I had to have a call with someone on their team.

They positioned it as a call with a coach to help me get set up with the product rather than a sales call. It was easy to schedule and, in the end, the call left me thinking, “wow, this product is way better than I thought.”

My experience shows that introducing a human touch into the mix can add a little bit of friction. Yet sometimes, adding friction to certain stages increases the customer’s emotional connection with the product. That bit of carefully placed friction ultimately makes the customer more enthusiastic about buying the product.

3. PLG as a mindset and culture shift

The PLG tool chest can only get you so far. The same goes for using PLG as your business model. People deep in the PLG world have a certain mindset that’s beneficial because they approach all aspects of their work in a data-driven, experimental, and pragmatic way.

A PLG mindset or culture shift is very difficult to just trigger or put in place. You can’t install culture. You can’t install a mindset. For a mindset and culture to develop, people have to use PLG—either as a tool chest or a motion—and see for themselves that it works.

In PLG, you track behavioral analytics and use them as your guide to improve the customer journey and impact key product metrics like acquisition, time-to-value, and retention. You loop through a series of steps.

First, you develop a hypothesis about where to focus your efforts and what you should try to improve in that area. Let’s say you believe that getting more customers through onboarding will help with retention.

Next, you test out different solutions to reduce the drop-off in onboarding, measure the impact of those solutions, and analyze the overall impact of improving onboarding on your product. Then, you repeat. The process of going through that loop again and again helps you see that PLG works and builds up faith in it within your organization.

One thing I’ve also noticed is that junior product managers in their first job often find it easier to work with a PLG mindset. They’re like a clean slate, so they don’t feel the constraints of their prior experience and are more open to PLG.

On the flip side, some people completely buy into PLG because they’ve felt the sheer pain of not running a PLG motion over the years. They’ve seen how broken a lot of sales processes and flows are, so they’re ready to try something else.

For some people, a PLG culture just means having a good product mindset. Regardless of what we call it, when you start to implement elements of PLG, you set yourself on the path to achieving that mindset.

To me, a PLG mindset and culture mean being pragmatic. People who work in product tend to get attached to their vision, but a PLG mindset means that you don’t treat ideas as precious.

Adopting a PLG mindset also forces you to find a series of balances:

  • You operate in a data-driven way and stress the details to ensure your data is in order, but follow your gut when it makes sense.
  • You challenge norms but take the time to prove things with work and evidence.
  • You are analytical and probabilistic but fiercely defend the customer’s perspective.

Craft your PLG strategy

Are you ready to craft a PLG strategy that works for your organization? Download our PLG worksheet to get started.

If you enjoyed this post, follow me on LinkedIn for more on product strategy and product-led growth.

Product-led Growth diagrams CTA ad

John Cutler

John Cutler is a former product evangelist and coach at Amplitude. Follow him on Twitter: @johncutlefish

More from John

Perspectives